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Tuesday, 18 August 2009
Page: 5221


Senator CARR (Minister for Innovation, Industry, Science and Research) (4:30 PM) —I table a revised explanatory memorandum relating to the Renewable Energy (Electricity) Amendment Bill 2009 and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

Renewable Energy (Electricity) Amendment Bill 2009

Australia is increasingly faced with compelling evidence of the effects of climate change and the risks of not acting to reduce carbon pollution. We know that new data and scientific understanding compiled since the Intergovernmental Panel on Climate Change 2007 report are painting an even more worrying picture of climate change for the whole world.

The Australian people have clearly indicated that they expect our Government to take decisive action on climate change and the Government is committed to introducing the Carbon Pollution Reduction Scheme. So it is important to set foundations that will stand Australia in good stead to position us to take advantage of opportunities in a carbon-constrained world. We must provide our future generations with an economic and environmental legacy that matches the one we enjoy.

The world’s attention is focused on securing a post-2012 agreement at Copenhagen. And it is in Australia’s national interest to secure an ambitious deal that stabilises greenhouse gas emissions in the atmosphere at 450 ppm carbon dioxide equivalent or lower. What matters most as we try to secure a global deal is what we do at home. Our domestic agenda is our platform for Copenhagen in helping to shape a global solution.

In order to discharge our obligations to address climate change, the Carbon Pollution Reduction Scheme was recently introduced into the House of Representatives in May. In introducing this bill today, the Government is laying the second foundation of its highly significant institutional change in environmental and economic policy in Australia.

Renewable Energy Target scheme - part of a comprehensive approach

The Government’s commitment to a Renewable Energy Target of 20 per cent of our electricity supply to come from renewable sources by 2020 is a key measure within the Government’s comprehensive approach to tackling climate change.

The expanded Renewable Energy Target will complement the proposed Carbon Pollution Reduction Scheme now before the Parliament and will accelerate the development and deployment of renewable energy technologies.

The Council of Australian Governments agreed to the design of the Renewable Energy Target scheme on 30 April 2009, following extensive community consultation. As the Prime Minister observed at the time, that agreement represents a major step towards Australia’s low pollution future.

Today, in introducing legislation to give effect to the Renewable Energy Target, we move closer towards that low pollution future.

The Renewable Energy Target scheme will bring the Mandatory Renewable Energy Target and existing and proposed state and territory schemes into one national scheme, avoiding the inefficiencies, and administration and compliance costs, of multiple schemes operating around the nation. The legislative framework will ensure a smooth transition into the national scheme for the only existing state-based scheme, the Victorian Renewable Energy Target.

Electricity generation accounts for more than one-third of Australia’s current greenhouse gas emissions, so Australia’s transition to a low pollution future will require a significant transformation in this sector. The Renewable Energy Target scheme will accelerate deployment of a range of renewable energy technologies like wind, solar, biomass and geothermal power over the next two decades. Over the longer-term the Carbon Pollution Reduction Scheme will be the main driver of renewable energy deployment.

As a transitional measure, the Renewable Energy Target scheme will help transform the electricity sector and drive the low-pollution electricity generation that we need to tackle climate change. It will deliver on the Government’s commitment that 20 per cent of Australia’s electricity supply will come from renewable sources by 2020.

The Renewable Energy (Electricity) Amendment Bill 2009 amends the Renewable Energy (Electricity) Act 2000 to increase the existing Mandatory Renewable Energy Target from 9,500 gigawatt-hours to reach 45,000 gigawatt-hours in 2020. This change will increase the existing target by more than four times. Building on the existing Mandatory Renewable Energy Target framework, the new Renewable Energy Target scheme will create a guaranteed market for additional renewable energy deployment, using the mechanism of tradeable renewable energy certificates that are created by renewable energy generators. And this in turn will attract additional investment and create additional jobs in renewable energy in Australia.

The Renewable Energy Target scheme is part of the Government’s economically responsible approach to tackling climate change. It focuses on providing support for the most cost-effective renewable energy technologies.

The expanded Renewable Energy Target will accelerate green jobs and together with the Carbon Pollution Reduction Scheme will drive around $19 billion in investment in the renewable energy sector in the period to 2020.

Key design features of the Renewable Energy Target scheme

Higher annual targets under the expanded Renewable Energy Target scheme will apply from 1 January 2010 and will reach 45,000 gigawatt-hours in 2020. To provide renewable energy investors with even greater legislative certainty, the 45,000 gigawatt-hour target will be maintained until 2030.

The Renewable Energy Target scheme includes many of the features of the current Mandatory Renewable Energy Target, including eligible sources and banking of renewable energy certificates to promote smoother investment over time. It is a broad-based incentive which provides a significant platform for accelerating the deployment of a range of renewable energy technologies.

The Government recognises that households are keen to do their bit in the fight against climate change. The Renewable Energy Target will assist with the upfront costs of installing small-scale renewable energy systems, including household solar photovoltaic systems, by introducing a ‘Solar Credits’ mechanism. Solar Credits work by allowing owners of small scale renewable energy systems to earn multiple renewable energy certificates for renewable energy produced by these systems.

Solar Credits, which take effect for systems installed from 9 June 2009, will provide the solar industry with certainty and a solid platform for future growth.

A related bill, the Renewable Energy (Electricity) (Charge) Amendment Bill 2009, increases the level of the shortfall charge under the Renewable Energy Target scheme from $40 per megawatt-hour to $65 per megawatt-hour. The shortfall charge encourages compliance with the Renewable Energy Target scheme, as liable parties who do not meet their obligations to purchase renewable energy certificates will need to pay this charge. Increasing the shortfall charge to this level will allow the price of renewable energy certificates to be sufficient to drive investment in renewable energy in order to meet the Government’s significantly increased renewable energy targets. The level of the shortfall penalty will be monitored to ensure it remains effective as an incentive for investment in renewable energy.

The Government recognises the impact of the Renewable Energy Target on emissions-intensive trade-exposed industries in the context of the proposed Carbon Pollution Reduction Scheme and the additional pressures these firms are experiencing as a result of the global recession. As part of the consultation process, stakeholders suggested that assistance under the Renewable Energy Target should take account of the cumulative impact of the Renewable Energy Target and the Carbon Pollution Reduction Scheme.

The Government listened to industry and has therefore decided to provide assistance under the Renewable Energy Target, reflecting the cumulative impact of the Renewable Energy Target and the Carbon Pollution Reduction Scheme.

The Bill provides for regulations to be made to provide partial exemptions from liability under the expanded Renewable Energy Target. As agreed by COAG on 30 April 2009, partial exemptions will apply to those activities that are emissions-intensive trade-exposed activities under the Carbon Pollution Reduction Scheme. Exemptions will apply to 90 per cent or 60 per cent of an entity’s liability under the Renewable Energy Target, according to the respective category of assistance provided under the Carbon Pollution Reduction Scheme framework. All businesses will contribute to supporting renewable energy as the exemptions will only apply for liability above the existing 9,500 gigawatt-hour target.

The Bill also provides for a review of the operation of the Renewable Energy Target scheme to be undertaken in 2014 to coincide with the strategic review of the proposed Carbon Pollution Reduction Scheme. The review will allow the Government to ensure that the expanded national Renewable Energy Target scheme remains effective as a measure to increase the deployment of renewable energy generation in Australia.

Government funding for renewable energy

The Renewable Energy Target measure is complemented by significant direct support that the Government is providing to the renewable energy industry through a range of initiatives. As part of the 2009-10 Budget, the Government announced the $4.5 billion Clean Energy Initiative, which will kickstart a range of critical low-emission energy technologies in the marketplace.

As part of the Clean Energy Initiative, the Government will invest $1.6 billion in solar technologies, including $1.5 billion for the Solar Flagships program and $100 million for the Australian Solar Institute, which supports research into solar thermal, solar photovoltaic, and other solar energy technology. The Solar Flagships program will aim to create an additional 1,000 megawatts of solar generation capacity. This ambitious target is three times the size of the largest solar energy project currently operating anywhere in the world and may demonstrate both solar thermal and solar photovoltaic technologies.

The Clean Energy Initiative also includes $465 million to establish Renewables Australia, to support leading-edge technology research and bring it to market.

In addition, the $480 million National Solar Schools Program is giving Australian schools a head start in tackling climate change and conserving our precious water supplies - over 4000 schools have registered to participate and more than $10 million in grants have already been approved.

The Government recognises that we need to take action to tackle climate change with a comprehensive set of measures. Expansion of renewable energy generation represents a significant opportunity to reduce Australia’s energy sector emissions while driving $19 billion of investment and creating the green jobs of the future as part of an estimated thirty-fold increase in the renewable electricity sector by 2050.

The implementation of the expanded national Renewable Energy Target scheme as outlined in this bill represents a major step towards transforming the electricity sector and the Australian economy to contribute to a low pollution future.

But even with complementary measures like the expanded Renewable Energy Target in place, Australia’s emissions will still be around 20 per cent higher in 2020 than they were in 2000, as opposed to as much as 25 per cent less with the Carbon Pollution Reduction Scheme.

Without the Carbon Pollution Reduction Scheme, we can’t halt climate change.

Without the Carbon Pollution Reduction Scheme, we will keep making climate change worse.

And the simple fact is that without the Carbon Pollution Reduction Scheme, we have no means to deliver our emissions reductions targets, which are ambitious, but necessary.


Renewable Energy (Electricity) (Charge) Amendment Bill 2009

The Renewable Energy (Electricity) (Charge) Amendment Bill 2009 amends the Renewable Energy (Electricity) (Charge) Act 2000 and, together with the related Renewable Energy (Electricity) Amendment Bill 2009 Renewable Energy (Electricity) Amendment Bill 2009, implements the expanded national Renewable Energy Target Scheme to deliver on the Government’s commitment to ensure that 20 per cent of Australia’s electricity is supplied from renewable sources by 2020.

This bill increases the level of the shortfall charge under the expanded Renewable Energy Target scheme from $40 per megawatt-hour to $65 per megawatt-hour. The shortfall charge encourages compliance with the Renewable Energy Target scheme, as liable parties who do not meet their obligations to purchase Renewable Energy Certificates will need to pay this charge. Increasing the shortfall charge to this level will therefore act as an incentive for investment in renewable energy in order to meet the Government’s significantly increased renewable energy targets.

The level of the shortfall penalty will be monitored to ensure it remains effective as an incentive for investment in renewable energy.

According to data published by the Office of the Renewable Energy Regulator, there has been a consistently high level of compliance with the Mandatory Renewable Energy Target since the scheme began in 2001, which means that very few liable parties have paid the shortfall charge. The new shortfall charge seeks to encourage affordable deployment of renewable energy through continued high levels of compliance, while taking into account the significant increase in annual targets under the expanded scheme.